Quizzes and Tests Chapter 1-6
What is the name of the act that created the NMLS? 1. Frank-Dodd Act 2. SAFE Act 3. RESPA 4. TILA
2.
A 15-year fixed-rate mortgage is a traditional mortgage.
False
A borrower's intent to proceed (ITP) must be verbal to count.
False
A conventional loan can only be a conforming loan.
False
A mortgage lender is an individual who, for compensation or gain, or in the expectation of compensation or gain takes residential mortgage loan applications, and offers or negotiates terms of a residential mortgage loan.
False
A person who has worked at a bank giving loans could be considered a Mortgage Loan Originator.
False
HOEPA was an amendment made to RESPA.
False
According to FACTA, consumers are entitled to a free credit report from the three credit reporting agencies every six months.
False Every year
The three types of interest rate caps on ARMs are called the first adjustment, subsequent adjustment, and the last adjustment.
False First adjustment cap, subsequent adjustment cap, and lifetime adjustment cap
The first number in an ARM represents the amount the interest rate can increase or decrease over the life of the loan.
False Just for the first adjustment
A 30-year mortgage is a great option for a borrower who wants lower payments so they have money to save.
True
A conventional loan is not insured by the Federal Government.
True
Once you have your licensed it must be renewed every year by December 31st or sooner.
True
Regulatory authorities have the authority to investigate, impose penalties, provide supervision, or a combination of all three.
True
SARs (suspicious activity reports) must be filled out using FinCEN when transactions are over $25,000.
True
Section 8 of RESPA says that no one may receive compensation for referring a potential borrower to a mortgage company or servicer on a federally regulated mortgage loan.
True
USDA loans are available in rural areas with less than 35,000 people.
True
How much would a borrower pay for two discount points on a $150,000 mortgage? 1. $1,500 2. $1,750 3. $2,000 4. $3,000
4.
Borrowers must always have at least a 20% down payment to buy a home.
False
Having your licensed revoked in another state is not a reason the state could deny your license.
False
If a veteran is looking to obtain a mortgage, you only need to show them VA loans.
False
The Dodd-Frank Act was enacted in 2008.
False 2010
A jumbo loan is a single-family loan that exceeds Fannie Mae and Freddie Mac's loan limits.
True
A loan processor and underwriter must be licensed if they are independent contractors.
True
A red flag is activity that indicates that there might be fraud or identity theft occurring.
True
A servicer must disclose an initial escrow account statement within 45 calendar days of settlement.
True
Each state has a regulatory authority.
True
Higher Priced Mortgage Loans (HPML) refers to section 35 of TILA.
True
All of the following are examples of prohibited actions for mortgage professionals, except: 1. Receiving compensation for MLO activities 2. Charging a fee for best efforts 3. Advertising terms that aren't available 4. Making any false statements to the NMLS
1.
The Uniform State Content Test includes all of the following topics, except: 1. State-specific content 2. Ethics 3. General mortgage knowledge 4. Federal laws and regulations
1.
If the index is two percent and the margin is two and a half percent, then the fully indexed rate is ________. 1. Two percent 2. Four percent 3. Four and half percent 4. Five percent
3.
Which of the following is NOT a feature of a HELOC? 1. When the balance is repaid the homeowner may use it again 2. It is a mortgage loan line of credit 3. Requires a large lump-sum payment at the end of the term with a smaller payment to start 4. Borrowers can get a lump sum disbursement
3.
All of the following are actions the Commissioner can take, except: 1. Denying or revoking licenses 2. Imposing fines or penalties 3. Investigating consumer complaints 4. Issuing a unique identifier
4.
All of the following are attributes of an adjustable-rate mortgage (ARM), except: 1. The interest rate can change periodically 2. It is based on an index that changes 3. It is based on a margin that's fixed 4. It is the most common type of mortgage
4.
In which of the following situations would an MLO license be required? 1. When an individual performs real estate brokerage activities 2. When an individual is solely involved in the extension of credit for time shares 3. When an individual is engaged solely as a loan processor or underwriter 4. When an individual offers or negotiates the terms of a residential mortgage loan
4.
Which of the following is an example of a conforming loan? 1. VA loan 2. FHA loan 3. USDA loan 4. Freddie Mac loan
4.
A reverse mortgage might be a good choice for a borrower who has someone who will want to inherit their home.
False
According to the Dodd-Frank Act, a substantial injury must include monetary damage.
False
According to the GLBA, there are three types of privacy notices that can be sent to customers.
False
According to the LO Comp Rule, an LO is allowed to receive higher compensation based on the interest rate of the loan.
False
An example of a customer relationship is when someone walks in the door and casually checks out a business.
False
Construction loans are usually 65% loan to value (LTV) so borrowers will need to have a 35% down payment.
False
FHA guidelines say it is acceptable for borrowers to have defaulted on their student loans and that in this case they are still eligible for an FHA loan.
False
Filling out your MU4 is a one-time requirement and won't need to be updated again throughout the course of your career.
False
Graduated payment mortgages (GPM) have a high initial payment that gradually lowers over time.
False
If you can't help a borrower, find a loan, charging a fee for best efforts isn't considered prohibited conduct.
False
It is a violation of the MAP Rule to ever tell a consumer that they are preapproved.
False
Prior to the Federal government passing the SAFE Act in 2008, all states required MLOs to be licensed.
False
Private mortgage insurance (PMI) is insurance for conventional loans that protects the borrower from loss.
False
QM mortgages do not have to comply with ATR requirements.
False
RESPA does not cover large tracts of land over 25 acres.
False
Rate sheets used for internal purposes are considered advertisements.
False
The National Test Component with the Uniform State Content will test your knowledge on the following five topics, federal laws and regulations, ethics, general mortgage knowledge, MATH, and customer service essentials.
False
The US PATRIOT Act was created by the Department of Homeland Security in response to the attack on September 11, 2001.
False
The funding fee for a VA loan is higher on the first usage than on subsequent uses when a borrower pays less than 5% in a down payment.
False
To be a licensed MLO you must apply for a state, and national license.
False
To determine a borrower's LTV, you take the loan amount and multiply it by either the purchase price or the property's appraised value, whichever is lower.
False
VA loans are unavailable for the veteran's surviving spouse.
False
You are legally allowed to pull a credit report for a friend as a mortgage professional.
False
The servicer must send a disclosure to the loan applicant within seven days if the loan might be sold, assigned, or transferred to any other entity at any time.
False 15 Days
The National test contains 120 questions, and 10 of those are unscored. The extra 10 questions are placebo questions.
False 5 are unscored
The affiliated business disclosure must be provided to the borrower within three days of the referral.
False At the time of referral
The 3 secondary market players are, FNMA, FHLMC, and HMDA.
False FNMA, GNMA, and Freddie
APR is used to identify whether a loan has high costs and fees.
True
ATR aims to remedy loose underwriting practices and requires entities to determine whether a borrower has the ability to repay a loan.
True
According to FCRA, employers are allowed to pull a credit report on a mortgage professional job applicant.
True
An ARM could be a possible choice for a veteran who is having financial difficulties.
True
An adjustable rate mortgage (ARM) is one where the interest rate periodically changes over the life of the loan.
True
An appraisal may not always be required with a streamline mortgage.
True
Bridge loans are also called Cross-Collateral loans.
True
Debt-to-income is a calculation made to determine whether the borrower can repay the loan they are attempting to receive.
True
Every state has their own requirements related to disciplinary action.
True
FHA loans require two types of insurance: UFMIP and annual mortgage insurance.
True
GLBA has three arms: The Safeguard Rule, The Opt-Out Rule, and The Pretexting Rule.
True
HOEPA restricts encouraging a default on a current loan that is going to be refinanced.
True
HPML (higher priced mortgage loans) are covered under section 35 of TILA.
True
Hybrid ARMs are a blend of fixed rate and adjustable loans.
True
If you fail the National test 3 times, you must wait 6 months to retake the test.
True
If you forget to renew your license, there is a reinstatement period in some states, and you can do late continuing education.
True
If you have violated to comply with a cease and desist order the maximum penalty for each act or omission is $25,000.
True
If you want to be licensed in multiple states it is important to do discover each state, initial licensing, fees, pre-licensing education, requirements, renewal fees, continuing education requirements, and one other important thing about initial licensing and continuing licensure in each state.
True
In addition to the 20-hour course, it is suggested to spend an extra 40-60 hours studying all the content before taking the exam:
True
Mortgage brokers usually do not fund their own loans.
True
Steering occurs when a mortgage professional steers a borrower into a loan that makes the mortgage professional more money and may not be in the best interest of the borrower.
True
TILA (Reg Z) does not apply to commercial or agricultural loans.
True
TRID does not apply to HELOCs and Reverse Mortgages.
True
The Department of Housing and Urban Development (HUD) insures the Federal Housing Administration (FHA) loans.
True
The Do Not Call Rule restricts the hours when unsolicited telephone calls can be made.
True
The Federal Reserve System was created in 1913.
True
The funding fee on an IRRRL is 0.50%.
True
The periodic interest rate is the annual interest rate divided by the number of compounding periods.
True
The right of rescission does not apply to purchase transactions.
True
The two most common types of mortgages are fixed rate and adjustable rate mortgages.
True
Through new regulations in 2018, customers can put a credit freeze, or lock, on their credit report with all three credit bureaus for free.
True
To detect money laundering there must be independent testing by a third party provider every 12 to 18 months.
True
To qualify for a HECM, a borrower must be 62 years of age or older.
True
VA loans can be assumable.
True
When a loan has a safe harbor it means that the lender complied with ATR and QM regulations.
True
You will pay a non-refundable application fee; the cost of the fee varies by state.
True
Your pre-licensing education requires, 3 hours of federal law, 3 hours of ethics, 2 hours of non-traditional mortgage products, and 12 hours of electives.
True
